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A reexamination of South Korea's aggregate import demand function : The bounds test analysis

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  • A reexamination of South Korea's aggregate import demand function
  • Chang, Tsnagyao; Ho, Yuan-Hong; Huang, Chiung-Ju
  • Chung-Ang University(Economic Research Institute)


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Title A reexamination of South Korea's aggregate import demand function
Similar Titles
Sub Title

The bounds test analysis

Material Type Articles
Author(English)

Chang, Tsnagyao; Ho, Yuan-Hong; Huang, Chiung-Ju

Publisher

[Seoul]:Chung-Ang University(Economic Research Institute)

Date 2005-06
Journal Title; Vol./Issue Journal of Economic Development:vol. 30(no. 1)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Trade
Holding Chung-Ang University

Abstract

This paper uses a robust estimation method referred to as the unrestricted error correction model - the bounds test analysis to re-analyze the long-term relationships between the demand for imports and it’s determinants for South Korea over the period 1980-2000. Our results show that the volume of imports, income, and relative prices are all cointegrated. The estimated long-run (short-run) elasticities of import demand with respect to income and relative price are 1.86 (0.86) and -0.2 (-0.05), respectively. The major implication of our study is that neither monetary nor fiscal policies may be used as instruments to maintain the trade balance in South Korea’s favor during this sample period.